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Clinton Plan Seen as 'Scary' for Hospitals

April 11, 1993|SARA FRITZ | TIMES STAFF WRITER

MONONGAHELA, Pa. — Anthony M. Lombardi cringes when he thinks about how President Clinton's plan for health care reform is likely to alter the economic landscape in which he operates a profitable, well-regarded community hospital.

"It's scary--no doubt about it," said Lombardi, president and chief executive of Monongahela Valley Hospital in this western Pennsylvania town.

If Clinton remains true to his word, the Administration's new health care plan is likely to significantly alter the reimbursement system, further limiting the fees that hospitals receive from the government for treating the poor under Medicaid and the elderly under Medicare. Even now, the reimbursements do not cover the costs of either program.

Furthermore, the Administration is likely to limit the ability of hospitals to shift costs to private patients and insurers as a means of making up any shortfall in government payments.

These and other potential changes in the health care system are causing anxiety among the nation's hospital administrators, who are questioning how Clinton's plan will affect their balance sheets. In fact, many hospitals already are hedging against reforms by trimming costs now.

At Monongahela Valley Hospital, a 300-bed facility that has never operated in the red, Lombardi recently imposed a hiring freeze and began searching for other ways to economize. "We are fairly typical in that regard," he said. "You see a lot of retrenching going on in a lot of hospitals right now."

Although nearly every American will be affected by the changes being proposed for the health care system, hospitals are likely to experience the most turmoil because they lie at the heart of the nation's health-delivery system. Virtually every aspect of their business could be altered, in one way or another, by the plan Clinton has promised to unveil next month.

But despite the dramatic changes that loom for their institutions, hospital administrators like Lombardi are by no means opposed to reform. Perhaps more than any other group involved in health care, they recognize the need for change.

When America's 35 million uninsured people get sick, the first place to which most of them turn for care is the hospital emergency room. In 1991, hospitals were left with an estimated $10.8 billion in unpaid bills from uninsured patients--up from $3.5 billion in 1981, according to a study by Lewin/ICF, a private Washington consulting firm. Similarly, hospitals lost $4.37 billion in the same year in uncompensated care for Medicare patients.

To provide care for the uninsured and to make up for the shortfall in Medicare and Medicaid payments, hospitals have raised prices drastically for privately insured patients--often causing an uproar in their communities.

As a result, hospitals keenly feel the need for a new system that will contain costs and provide coverage for all Americans.

To be sure, the hospitals themselves share some responsibility for creating the problems that exist. By competing for the most profitable business over the last decade, hospitals often have expected the public to finance their investments in high-tech equipment that their communities did not always need.

In an effort to help find a solution to the problem, the American Hospital Assn. has developed a full-blown reform proposal that calls for health coverage of all workers through employer-provided insurance, full funding of government health care programs and a system in which care would be provided by doctors and hospitals linked together in so-called "community care networks."

These ideas are not necessarily incompatible with the reform proposal being drafted at the White House. But there are a number of ideas that the President's health care advisers are known to be considering that would be hard for the hospitals to accept, including further cuts in Medicare and Medicaid payments, a freeze on health care prices, a tax on hospitals and a long-term phase-in period for insuring the uninsured.

Hospital administrators say they believe that they have every reason to be suspicious of new government health care programs. Many times in the past, the government has established elaborate new health care programs, imposing new standards on hospitals and then gradually cutting funding for these programs.

"No health care provider can trust the government," Lombardi said. "They have broken every promise they ever made to us. They created Medicare and promised to fund it. They broke their promise. They created Medicaid and promised to pay for it. They came up with prospective payment (reimbursement under Medicare), and they broke that promise too."

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